The fund manager Wilson Asset Management (WAM) has recently identified some S&P/ASX 200 Index (ASX: XJO) mining shares that it owns (or owned) in one of its main portfolios.
WAM operates several listed investment companies (LICs). Two of these LICs are WAM Capital Limited (ASX: WAM) and WAM Research Limited (ASX: WAX).
There's also one called WAM Leaders Ltd (ASX: WLE) that looks at the larger businesses on the ASX, often referred to as ASX blue-chip shares.
WAM says WAM Leaders actively invests in the highest quality Australian companies. But does WAM have a good reputation for picking stocks?
The WAM Leaders portfolio has delivered gross returns (before fees, expenses, and taxes) of 14.9% per annum since its inception in May 2016. This compares to the S&P/ASX 200 Accumulation Index average return of 8.4% over the same time.
WAM outlines these ASX 200 mining shares in its recent monthly update.
South32 Ltd (ASX: S32)
WAM described South32 as a global diversified metals and mining company, with a portfolio of assets producing aluminium, alumina, manganese ore, copper, zinc, lead, silver, nickel and metallurgical coal. Quite the list.
The fund manager noted that South32 reported a "strong earnings result". Further, it surprised the market with a dividend above expectations. It also increased its share buyback by $220 million.
WAM is still positive on this ASX mining share because of its "future-facing portfolio optionality". This includes the expansion of the recently-acquired SierraGorda copper mine and the Hermosa pre-feasibility study on the manganese Clark oxide deposit due later this calendar year. It was also pointed out that further investment in Illawarra Metallurgical Coal is no longer proceeding.
South32 has "transformed the portfolio since its demerger in 2015 and management continues to be proactive in reviewing and optimising their operations".
OZ Minerals Limited (ASX: OZL)
This is the other ASX 200 mining share that WAM identified. It's an Australian- and Brazil-based copper, gold and nickel producer.
Last month, BHP Group Ltd (ASX: BHP) lobbed a non-binding, indicative bid to buy OZ Minerals. The offer was at a 32% premium to the closing share price on 5 August 2022.
The board of OZ Minerals decided to reject the offer because of a number of reasons.
Reasons include its high-quality portfolio of assets and the unique proposition that OZ Minerals is the only major primary copper miner on the ASX.
The fund manager agrees with the board that the assets have "strategic appeal" to several players that are seeking greater exposure to future-facing materials. It believes further proposals are "likely".
